On the economic front, the “higher for longer” of interest rates has sunk in and people are accepting of the new realities. Also as expected, people have adjusted their spending and debt habits as a result. Home, auto, and large cost purchases are down significantly. Interestingly, one of the major media publications has run a headline titled “people have finally run out of their Covid stimulus savings”. Sad but had to happen for the economy to slow meaningfully (which is exactly what’s happening).
On the political front, with 2024 being a Presidential election year, the media hype and drama will intensify. Social media (with the help of AI) will take us to new lows from a behavioral standpoint and the “37 economists who predict doom if…..” will be out in force for both sides. As is normal, we counsel clients NOT to get caught up in the emotions and NOT to make quick and short sided long term portfolio decisions based on election media bulls%!t. With this being our seventh presidential cycle, I can say the hype is always worse than the reality, regardless of which guy wins or loses.
One other point of interest, at a higher level, is the constant drivel of this thing called “artificial intelligence”. Simplistically, AI is the next generation of systems which have grown from simple “if/then” output to output that evaluates on multiple derivatives and changes based on a “thought process”. It’s not necessarily new but it is new in its effective implementation. If you have been on Amazon and seen prices change multiple times and from multiple sellers, you have witnessed AI in real time. Same with airline, hotel, rental car, or sports ticket bookings. There will be numerous good and bad that stems from it (which will be the subject of another rant) but it is a potential “megatrend” with implications both economic and human on a grand scale. As with past megatrends, there will be many winners and many “not so much” and its usually not the early “slam dunk” companies that are the long-term benefactors. We are already seeing productivity (profit) improvements from regular “old school” companies with early AI use, and one would expect that to continue.
Looking ahead, we maintain our market neutral weighting across all portfolios. We had reduced equity exposure in Q1 and are maintaining such. Not too hot…not too cold is the thesis. Still feel the easy “post Covid” returns have been had which, in our business, is called excess returns. But, and most importantly, is that we feel the forward look is positive and the “higher for longer” environment is a good thing long term. A reasonable cost of money is a more solid base than an artificially created zero interest rate environment.
As always, don’t reach out to discuss anything. We work for you and your family and it’s a responsibility we don’t take lightly. If you have a friend or family member who would enjoy or benefit from our rantings, feel free to pass over their contact info and we can add them to our list. Referrals are welcome and encouraged so feel free to make the intro if you know of someone who might be a fit. As the old saying goes, “May you live in interesting times” is applicable today as things are interesting and will get more so as the calendar turns.
All our best !!!
Ed, Frank, & Tammy
Retirement Capital Advisors
Edward Stiles
200 N Union St.
Kennett Square, PA 19348
cell 610-745-1931
Securities and Advisory Services offered through Commonwealth Financial Network®, member FINRA/ SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network
This writing is for the clients of Retirement Capital Advisors only and not for general circulation. It is for educational and informational purposes only. All references to stocks, bonds, indices, market sectors, large cap stocks, small cap stocks, international equities, etc are for informational and educational purposes only. You cannot invest directly in any index and all investment entail fees and charges. The narrative is purely illustrative and notional in nature and does not imply any guarantees to specific performance or specific numerical returns. Investing entails risk of loss including loss of invested principal.